April 25 (Bloomberg) -- French President Nicolas Sarkozy
considers Bank of Italy Governor Mario Draghi the leading
candidate to succeed Jean-Claude Trichet at the helm of the
European Central Bank, a person familiar with the matter said.

Support from Sarkozy after signals from German officials
that Draghi is their preferred banker would add momentum to a
campaign that has been pushed by Italian government officials.
The French leader may disclose his views as early as tomorrow at
a briefing in Rome with Italian Prime Minister Silvio
Berlusconi, a Sarkozy aide told reporters last week.

The key decision maker, German Chancellor Angela Merkel,
has yet to tip her hand. Merkel’s aides have indicated that
Germany, Europe’s biggest economy, no longer insists on a German
to succeed Trichet. A banker from Italy, which was the most
indebted euro country until passed by Greece, may enable the ECB
to make a more compelling case for fiscal discipline, says Ken
Wattret, chief euro-zone market economist at BNP Paribas SA.

“It would make it easier for the ECB to push the southern
European countries down the reform path,” the London-based
Wattret said in an April 20 note to clients. “It is not quite a
done deal yet, however, with Mrs. Merkel’s silence on the matter
rather conspicuous.”

With a late-June deadline looming, the appointment may
become entangled in German opposition to bailouts. As Portugal’s
imminent rescue pushes the cost of aiding euro states past 250
billion euros ($361 billion), Merkel may face domestic
criticism for choosing a southern European from a country with a
legacy of inflation and debt.

Viable Choice

Draghi’s status as the only candidate from among the four
biggest euro nations -- France, Germany, Italy and Spain --
makes him the most viable choice in Sarkozy’s view, the person
said.

Other candidates include Yves Mersch of Luxembourg, Erkki
Liikanen of Finland and Nout Wellink of the Netherlands. Klaus
Regling, a German who runs the bailout facility, has never been
a central banker.

Draghi has emerged as a front-runner since Germany’s Axel
Weber withdrew from the race in February. Now, German Finance
Minister Wolfgang Schaeuble sees him as the candidate likeliest
to be appointed as the ECB’s next chief, people close to him
say. Trichet’s eight-year term ends Oct. 31.

German Deputy Foreign Minister Werner Hoyer, who manages
European affairs, said in an April 15 interview that Draghi
would make a “very good” ECB president and uphold Germany’s
goal of a stable euro.

Financial Regulation

Draghi, 63, a Massachusetts Institute of Technology-trained
economist, has worked at the World Bank and Goldman Sachs Group
Inc. He is also chairman of the Financial Stability Board, which
was established by the Group of 20 nations in 2009 to oversee
development of standards to strengthen global regulation.

In a sign he understands the need to meet the skepticism
head on, Draghi has been appealing to the German inflation-fighting mindset. He said April 13 that monetary policy is still
“accommodative” even after the ECB raised its benchmark rate
this month.

In February, he told newspaper Frankfurter Allgemeine
Zeitung that Germany is an example for other nations, calling
for tougher sanctions for budget-rule breaches and vowing to
ensure price stability.